2019 (10) TMI 695 - AT - Insolvency and Bankruptcy

Admissibility of application - initiation of CIRP - Section 10 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The impugned order dated 15th March, 2019 is against the provision of law and cannot be sustained. It is not in dispute that the application filed under Section 10 is without approval of the Annual General Meeting / Extra-Ordinary General Meeting . Simultaneously a plan was submitted which is against the provision of Section 65 of the I B Code as it appears that it is filed with malicious intent for any purpose other than for the resolution of insolvency and liquidation. For this reason, we set aside the impugned order dated 15th March, 2019. The petition under Section 10 of the I B Code filed in Form 6 is dismissed.

Summary

Issues:
1. Application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 without approval of the Annual General Meeting/Extra-Ordinary General Meeting.
2. Submission of a plan under Section 31 of the I&B Code allegedly with malicious intent.
3. Challenge to the impugned order admitting the application under Section 10.
4. Shareholders' desire to withdraw the application.
5. Legality of the impugned order dated 15th March, 2019.
6. Assessment of fees and costs for the Interim Resolution Professional.
7. Liability of the Corporate Debtor to pay the fees and costs.

Detailed Analysis:

1. The Corporate Debtor filed an application under Section 10 of the Insolvency and Bankruptcy Code, 2016, along with a petition under Section 31 for admitting the application and approving the plan. The National Company Law Tribunal admitted the application and observed that there was no need to invite Expression of Interest (EoI) as the resolution plan had already been considered during SARFAESI Proceedings. The Appellants challenged this order, citing various grounds, including the absence of approval from the shareholder meetings.

2. The Appellate Tribunal found that the application under Section 10 was filed without the requisite approval and that the plan submitted appeared to have been filed with malicious intent. Consequently, the impugned order was set aside as being against the provisions of the law. The Tribunal dismissed the petition under Section 10 and directed the Adjudicating Authority to close the proceedings, declaring all related actions as illegal and setting them aside.

3. The Shareholders expressed a desire to withdraw the application, but due to an interim order, the Adjudicating Authority was unable to pass an order of withdrawal. The Tribunal, after hearing all parties, concluded that the impugned order was unsustainable and ruled in favor of setting it aside, thereby dismissing the application filed under Section 10.

4. Considering the work done by the Interim Resolution Professional for about six months, the Tribunal assessed the fees and costs to be paid, totaling Rs. Eight Lakhs. It was agreed that the Corporate Debtor would bear these costs, and the Tribunal directed the Corporate Debtor to pay the total amount within three weeks.

5. In conclusion, the appeals were allowed, the impugned order was set aside, and the Corporate Debtor was released from the legal constraints, allowing it to function independently through its Board of Directors. The Tribunal made a detailed assessment of fees and costs, ensuring that the Corporate Debtor would cover these expenses.